U.S. Plans Duties on Chinese Furniture

WASHINGTON — The Bush administration will propose anti-dumping duties on as much as $1 billion in imported Chinese bedroom furniture, officials said Thursday, escalating a trade dispute that has strained U.S.-China relations and splintered the domestic furniture industry.

The preliminary ruling in a long-running anti-dumping case will be announced today by the Commerce Department's International Trade Administration, according to the officials, who asked not to be named. Importers will be required to post bonds now to cover duties that would be imposed upon a final ruling in the case later this year.

The exact amount of the proposed duties -- which would raise prices on the products in the U.S. market -- was still under discussion Thursday, one administration official said. A coalition of U.S. furniture makers has requested import duties of as much as 400% on some items, but the final levies were expected to be considerably smaller.

"The decision won't be final until midnight [Thursday], so there are moving parts until that point," said the official, who requested anonymity.

For The Record Los Angeles Times Saturday June 19, 2004 Home Edition Main News Part A Page 2 National Desk 1 inches; 33 words Type of Material: Correction Furniture duties -- An article in Friday's Business section about planned U.S. duties on Chinese furniture exports misidentified Robert Walters, an intellectual property attorney at the law firm Pillsbury Winthrop, as Robert Walker.

Although the case affects less than 1% of total commerce between the two countries, it looms large in a broader debate over China's emergence as a global trading powerhouse, its role in the loss of U.S. factory jobs and the continuing decline of labor-intensive domestic industries such as furniture and textiles.

Many U.S. manufacturers -- including some in Southern California, a stronghold of furniture manufacturing in the West -- contend that Chinese factories enjoy the advantages not only of low-cost labor but also of extensive government subsidies and an undervalued currency. As a result, they say, Chinese companies sell goods in this country at artificially low prices, a practice known as "dumping."

"This is a very significant case," said University of Maryland professor Peter Morici, a former International Trade Commission chief economist. "It should send a very clear message to the Chinese that they need to change the way they do business if they want access to this market."

The pursuit of the anti-dumping case is the latest of several actions taken by the Bush administration in response to complaints about Chinese trade practices. Last year, the administration applied protective quotas to several categories of Chinese textiles and apparel last year. In March, it filed the first World Trade Organization complaint against China, challenging a tax break provided to semiconductor makers in China.

Some critics, including Democratic presidential contender Sen. John F. Kerry, say President Bush has not been aggressive enough in ensuring that China plays by the rules of the global trading system. They note that the administration rejected a request by organized labor to penalize China for its workplace practices and declined to formally challenge China's currency policies.

Although the U.S. has imposed duties on other Chinese products, the furniture case is the largest anti-dumping action ever pursued against China, and some trade experts said it could be a harbinger of other enforcement moves.

"It's certainly very important in the furniture industry, and it may have repercussions for other manufacturing industries in the United States," said Robert Walker, an intellectual property attorney at law firm Pillsbury Winthrop in McLean, Va.

The anti-dumping duties would apply to several types of wood bedroom furniture made in China, including beds, night tables, dressers and mirrors. By boosting prices of those goods in the U.S. market, the levies would give domestic manufacturers an opportunity to shore up their competitive position.

U.S. furniture makers and labor unions, including two California companies, say China's undervalued currency and government subsidies enable Chinese firms to sell furniture in this country for less than it costs to make it virtually anywhere else.

Chinese bedroom furniture exports to the U.S. soared from $430 million in 2000 to $1.2 billion last year. Over the same period, U.S. wood furniture manufacturing employment declined by 35,000, or nearly a third, according to industry unions.

"We're competing with the rest of the world just fine," said Doug Bassett, vice president of Vaughan-Bassett Furniture Co. in Galax, Va. "The problem is China. And it's not China's cheap labor. It's all of the artificial manipulations and subsidies that the Chinese system provides, not only to their furniture industry but to a whole raft of industries."

Leading the opposition to the anti-dumping case is a coalition of U.S. furniture importers, distributors and retailers, which says duties would raise the cost of bedroom furniture, deprive the market of items produced only in China and reduce employment in their sector.

"What we buy from China we can't get from the United States," said Keith Koenig, owner of City Furniture, a 13-store retail chain based in Fort Lauderdale, Fla. "There isn't anybody in the United States who wants to sit around and carve wood for a poster bed."

The anti-dumping case has created deep divisions within the furniture industry. Some U.S. manufacturers also market lines of Chinese-made furniture, some retailers have stopped selling furniture made by the U.S. firms that filed the case, and others declined to participate in a boycott.

Meanwhile, industry officials say China's furniture exports have declined because manufacturers there have been anticipating the imposition of duties and the loss of U.S. market share.

"They've got no orders," Koenig said. "The whole supply chain has dried up waiting for this to happen."